Location: Sierra County, CA | Metro: Yuba City, CA MSA
| Unit Size | Monthly FMR |
|---|---|
| Studio | $1,050 |
| 1 Bedroom | $1,150 |
| 2 Bedrooms | $1,400 |
| 3 Bedrooms | $1,950 |
| 4 Bedrooms | $2,340 |
| 5 Bedrooms | $2,714 |
| 6 Bedrooms | $3,040 |
| 7 Bedrooms | $3,283 |
| 8 Bedrooms | $3,447 |
U.S. Census Bureau data (2024)
The analysis of the Section 8 cap-rate for ZIP code 95922 reveals a significant disparity between government-subsidized rental income and market-driven rental income, which directly impacts the gross yield for investors.
Based on the Fair Market Rent (FMR) for a 2-bedroom apartment set at $1230 per month by the Department of Housing and Urban Development (HUD) for FY 2024, the annualized rental income would be $14,760. This figure represents the maximum allowable rent for Section 8 participants in this area. Given the median home value of $354,891, the implied gross yield for a property rented under the Section 8 program is approximately 4.16%. The calculation is straightforward: divide the annual rental income by the median home value. This yields a clear benchmark for investors considering properties in ZIP 95922 for Section 8 tenants.
In contrast, the market rent for a similar 2-bedroom unit is reported at $775 per month according to the Census Bureau's American Community Survey (ACS). When annualized, this equates to an annual rental income of $9,300. Using the same median home value, the implied gross yield drops significantly to about 2.62%. This lower yield reflects the typical market conditions for rental properties in the area, without the benefit of government subsidies.
The gross yield comparison clearly shows that renting to Section 8 participants offers a higher return on investment, specifically a 1.54% point difference in gross yield compared to market rents. However, the reality of the situation is influenced by other factors such as the 30.8% renter density in ZIP 95922, indicating a moderate demand for rental properties. The absence of data on days on market (DOM) suggests that there might be challenges in accurately predicting how quickly a property can be leased, either through the Section 8 program or at market rates.
Given the specifics of ZIP 95922, the higher gross yield from Section 8 rentals is more realistic for those willing to navigate the complexities of the housing assistance program. The program provides a guaranteed income stream, albeit subject to eligibility requirements and potential delays in payment processing. For small-portfolio investors and landlords, the decision should weigh the benefits of a higher gross yield against the administrative overhead and potential delays inherent in the Section 8 program.
Data Sources: FMR data from HUD (2027). Demographics from U.S. Census (2024).
About FMR: Fair Market Rent (FMR) is used to determine payment standards for the Section 8 Housing Choice Voucher program, initial renewal rents for some expiring project-based Section 8 contracts, and rent ceilings for HOME Investment Partnerships.